Fraudulent Bank Charges
Electronic Funds Transfer Act Attorneys
Many people have been in this situation: you check your bank account and see a withdrawal or a transfer that you don’t recognize. Maybe the bank made an error, or possibly someone got access to your account through fraud or identity theft. How can you get your money back?
Fortunately, you can dispute the unauthorized transfer with your bank under the federal Electronic Fund Transfers Act (“EFTA”) and Regulation E. EFTA requires your bank to reimburse the missing money as long as certain requirements are met.
IMPORTANT: The information provided below is not legal advice. EFTA and its implementing regulations are complicated and the information here provides only a broad overview that may not address your specific situation. Please contact us for a free consultation to discuss your specific situation. to discuss your options.
Top Five Tips About the EFTA
- Review your bank statements regularly. Bank statements allow you to quickly identify and correct errors or fraudulent activity.
- Act fast! There are strict time limits to asserting your rights under EFTA. Missing a deadline could waive your protections. Read the below information carefully to understand all the applicable deadlines.
- Contact your financial institution about anything unusual. To use EFTA protections, you must put your bank on notice that there is an issue.
- Document everything. Get the name, position, and employee number (if applicable) to anyone you speak to about your issue. Request any relevant documentation from your bank, especially if they did an investigation and d not refund your money.
- Call a lawyer. If you are unsure what to do next, call us! Our consultations are absolutely free, and if we take your case, you do not pay our attorneys’ fees!
For some FAQs, check out this page.
What Is The EFTA?
Most kinds of financial institutions must follow EFTA, including banks, savings associations, and credit unions. The law may even cover peer-to-peer payment applications like Zelle, Venmo, and Paypal. However, EFTA applies only to personal accounts—not business, corporate, or trust accounts. EFTA is a federal law, meaning that you can use EFTA no matter which state you live in.
As its name suggests, EFTA applies to electronic money transfers, which are any transfers made through electronic means (phone, computer, ATM, etc.). It does not apply to paper transactions (check, cashier check, etc.), transfers between two banks or businesses (including wire transfers), or transfers to buy or sell securities or commodities. EFTA also does not cover fraudulent charges to credit cards. Credit card disputes are instead addressed by a different law, the Fair Credit Billing Act.
Financial institutions covered under EFTA are required to give customers regular (usually monthly) statements that show the amount and date of any transfers from their account. The statements should also identify the type of transfer, the identity of anyone who received a transfer from the account, and information about where or how the transfer was made.
IMPORTANT: You should review your bank statements regularly to identify that all transfers to and from your account are correct. EFTA provides protection for both unauthorized transfers (including transfers because of fraud or identity theft) and for errors.
EFTA provides protection for both unauthorized transfers (including transfers because of fraud or identity theft) and for errors.
The EFTA Protects You From Unauthorized Transfers
An electronic transfer is “unauthorized” if someone other than the person named on the account (the accountholder) makes the transfer, you have not authorized the person to make such transfers, and the accountholder does not benefit from the transfer. Essentially, this is a “fraud” on your account.
If you promptly notify the bank of an unauthorized transfer, then the bank may have to reimburse you for some or all of the money that was taken from your account. It is important to act quickly or you may waive your right to a reimbursement. How much money you are entitled to may depend on how quickly you act and how the unauthorized person accessed your account:
- If the person who made the unauthorized transfer had your debit/ATM card or another “accepted means of access,” such as your bank account number, then your responsibility for your losses is at most $50 dollars if you notify the bank within 2 days after you learn of the loss or theft, or at most $500 dollars if you notify the bank within 60 days after the account statement showing the unauthorized transfer.
- If the person who made the unauthorized transfer did not have an “accepted means of access” (for example, by hacking directly into the bank server), then your responsibility is $0 if you notify the bank within 60 days after the account statement showing the unauthorized transfer.
This means that as long as you notify the bank within 60 days after the account statement showing the unauthorized transfer, you are at most responsible for $500 of the loss and the bank must reimburse the rest. Again, that amount may be lower if notify the bank within 2 business days or if the unauthorized transfer happened without an “accepted means of access.”
If you do not notify the bank within 60 days, you waive your right to reimbursement and may be responsible for the full amount that was stolen. The 60-day deadline may be extended for extenuating circumstances, such as extended travel or hospitalizations, but it is important to act as soon as you find out about the unauthorized transfer.
The EFTA May Protect You From Other Bank Errors
EFTA also imposes obligations on banks even if the transfer at issue was not the result of deliberate fraud but is instead some kind of mistake, by the bank or someone else. An “error” can mean incorrect transfers, bookkeeping errors by the bank, ATM malfunctions, or a misprinted bank statement.
The process to resolve errors is similar to that for unauthorized transfers. You have 60 days after the bank issues the statement showing the error to notify the bank. The law may extend the deadline, but it is important to act as soon as possible to make sure you preserve your rights under EFTA. If you notify the bank within 60 days, and the bank determines that there has been an error, then you are entitled to a full refund of any missing funds, including interest (if applicable).
The EFTA Includes A Dispute Process
For either an unauthorized transfer or another error, you must notify the bank of the issue to receive protection under EFTA.
You can give your bank notice of the error either orally or in writing, but if you give your bank only oral notice, the bank can require you to send it a written confirmation within 10 business days. If you do not provide written confirmation upon request within 10 business days, the bank is not required to reimburse your money while it investigates the fraud. You may have more limited remedies if the issue goes to court.
In your notice to the bank, you must include the following information:
- Your name and the number for the account with the error or fraudulent transaction
- A statement that you believe there is an error
- The amount of the error
- Any reasons you have for why you think the amount is an error
The bank must then perform a reasonable and good faith investigation to determine whether there is an error on your statement and send you a determination within 10 business days.
IMPORTANT: The bank can choose to extend their deadline to respond to 45 days, but only if it provisionally credits your account with the amount that you report as stolen or as an error. If the bank later determines that there is no error or theft, it may take back the money it provisionally credited to your account.
The Bank Has To Investigate Your Dispute
If the bank investigates the issue you reported and finds that there was an error or theft, it must correct the error within 1 business day of concluding the investigation. This means the bank must refund the money taken from your account, including interest. However, remember that you may be responsible for up to $50 or up to $500 of the missing amount if the error is an unauthorized transfer and the person who made the transfer has an “accepted means of access” to the account.
If the bank determines that there was no error or theft, it must give you a written explanation of its findings within three business days after it completes the investigation of the fraud on your bank account. If you request, the bank must promptly give you copies of all documents it relied on to conclude that there was no error.
IMPORTANT: If you think that the bank made the wrong decision, it is important to request and review all the documents it relied on in its investigation.
If you have already completed a dispute process with your bank and the bank has found there is no error, you may have a legal claim against the bank if the bank made the wrong decision or did not perform an adequate investigation.
Your remedies for such a claim may include up to three times the amount of money you lost because of the bank’s wrongdoing, including lost wages for the time you spent disputing the issue, overdraft fees, and damage to your credit. You may be able to receive statutory damages of up to $1,000. We do not charge our clients – instead, defendants pay our attorneys’ fees and costs if we are successful. The lawyers at Kemnitzer, Barron & Krieg, LLP can review your situation and help determine whether you may have a claim. Contact us for a free consultation to discuss your specific situation.
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